Planet Fitness, Inc. reported that third-quarter total revenue increased by 5.3 percent to $292.2 million from $277.6 million in the prior-year Q3 period, including system-wide same-club sales growth of 4.3 percent.

The company opened 21 new Planet Fitness clubs system-wide during the third quarter, including 12 franchisee-owned and nine corporate-owned clubs. As of September 30, 2024, the total number of system-wide clubs was 2,637.

Franchise Segment
Franchise segment revenue increased 4.3 percent to $102.4 million in Q3 from $98.2 million in the prior-year Q3 period. The $4.3 million year-over-year increase was comprised of $6.0 million from higher royalty revenue, of which $3.2 million was attributable to a franchise same-club sales increase of 4.5 percent, $1.6 million was attributable to new clubs opened since July 1, 2023, and $1.2 million was from higher royalties on annual fees. The increase was partially offset by a $1.5 million decrease in franchise and other fees, a $1.4 million decrease in placement revenue primarily driven by lower equipment placements, and a $0.9 million decrease in revenue associated with selling HVAC units to franchisees. Franchise segment revenue also reportedly includes $2.0 million of higher National Advertising Fund (NAF) revenue.

Franchise segment EBITDA increased 7.7 percent to $72.8 million in Q3. The $5.2 million increase is primarily the result of a $4.3 million increase in Franchise segment revenue, $1.6 million of lower selling, general and administrative expense, and $1.4 million of lower cost of revenue primarily from lower cost of HVAC units sold to franchisees, partially offset by $2.1 million of higher NAF expense.

Corporate-Owned Clubs Segment
Corporate-Owned Clubs segment revenue increased 13.1 percent to $128.1 million from $113.2 million in the prior-year Q3 period. Of the $14.9 million increase, $9.6 million was attributable to corporate-owned clubs included in the same-club sales base, of which $4.6 million was attributable to a same-club sales increase of 3.4 percent, $1.1 million was attributable to higher annual fee revenue and $3.9 million was attributable to other fees. Additionally, $5.3 million was from new clubs the company opened since July 1, 2023.

Corporate-Owned Clubs segment EBITDA increased 13.2 percent to $50.1 million. The $5.8 million increase was primarily attributable to $7.0 million from Corporate-Owned Clubs included in the same-club sales base, partially offset by lower EBITDA of $0.6 million from new clubs opened since July 1, 2023 and $0.6 million of higher selling, general and administrative expense.

Equipment Segment
Equipment segment revenue decreased 6.7 percent to $61.7 million from $66.1 million in the prior-year Q3 period. This $4.4 million decrease was primarily attributable to lower revenue from equipment sales to new franchisee-owned clubs. In the third quarter of 2024, PLNT had equipment sales to 15 new franchisee-owned clubs compared to 22 in the prior-year Q3 period.

Equipment segment EBITDA increased 12.5 percent to $18.5 million in the third quarter. The $2.1 million increase was primarily driven by higher margin equipment sales related to an updated equipment mix due to the adoption of the new growth model, partially offset by lower equipment sales to new franchisee-owned clubs.

Net Income
For the third quarter of 2024, net income attributable to Planet Fitness, Inc. was $42.0 million, or 50 cents per diluted share, compared to $39.1 million, or 46 cents per diluted share, in the prior-year Q3 period.

Net income was $42.4 million in the third quarter of 2024 compared to $41.3 million in the prior-year Q3 period.

Adjusted net income increased 5.7 percent to $54.7 million, or 64 cents per diluted share, from $51.8 million, or 59 cents per diluted share, in the prior-year Q3 period. Adjusted net income has been adjusted to reflect a normalized income tax rate of 25.8 percent and 25.9 percent for the third quarter of 2024 and 2023, respectively. It excludes certain non-cash and other items the company did not consider in evaluating ongoing operational performance.

Adjusted EBITDA increased $11.2 million to $123.1 million from $111.9 million in the prior-year Q3 period.

“We delivered solid results in the quarter, including more than 5 percent revenue growth, approximately 3 percent net income growth and approximately 10 percent Adjusted EBITDA growth, and are raising our outlook for certain key financial targets,” said Colleen Keating, CEO of Planet Fitness, Inc. “During the quarter, I had the opportunity to address franchisees, club employees, and our team members at our franchisee conference. This was an important opportunity to reinforce our strategic priorities of redefining our brand, enhancing member experience, refining our product, and accelerating club openings, which we expect will drive our next phase of growth. The enthusiasm the franchisees showed was highly encouraging. We also achieved a significant milestone by raising the price of our Classic Card membership to $15 for new members, marking the first increase in over 25 years, underscoring the tremendous value that we continue to offer our members. I am energized by our purpose of enhancing people’s lives and creating a healthier world and believe it sets us, our franchisees, and our shareholders up for long-term success.”

Balance Sheet Summary
Cash and marketable securities amounted to $530.7 million at quarter-end, which includes cash and cash equivalents of $298.8 million. Restricted cash was $67.8 million and marketable securities were $164.2 million as of September 30, 2024.

On June 12, 2024, PLNT entered a $280 million accelerated share repurchase (ASR) agreement with Citibank, N.A. On June 14, 2024, the company paid Citibank $280 million in cash and received approximately 3.1 million shares of the company’s Class A common stock, which were retired.

The final settlement of the ASR Agreement occurred on September 16, 2024. At the final settlement, Citibank delivered 0.7 million additional shares of the company’s Class A common stock, which were retired. The final number of shares repurchased was determined based on the volume-weighted average stock price of the company’s Class A common stock of $76.88 during the term of the transaction, less a discount and subject to adjustments under the terms and conditions of the ASR agreement.

Share Repurchase Program
On June 13, 2024, the company’s Board of Directors approved a share repurchase program of up to $500 million to replace the 2022 share repurchase program, which became effective on September 16, 2024 upon completing the ASR agreement. As of September 30, 2024, there is $500 million remaining under the 2024 share repurchase program.

2024 Outlook
For the year ending December 31, 2024, the company is reiterating the following expectations:

  • New equipment placements of approximately 120 to 130 in franchisee-owned locations
  • System-wide new club openings of approximately 140 to 150 locations

The following are the company’s growth expectations over its 2023 results:

  • System-wide same-club sales in the 4 percent to 5 percent percentage range (previously 3 percent to 5 percent);
  • Revenue to increase in the 8 percent to 9 percent range (previously 4 percent to 6 percent);
  • Adjusted EBITDA to increase in the 8 percent to 9 percent range (previously 7 percent to 9 percent);
  • Adjusted net income to increase in the 8 percent to 9 percent range (previously 4 percent to 6 percent);
  • Adjusted net income per share, diluted to increase in the 11 percent to 12 percent range (previously 7 percent to 9 percent), based on adjusted diluted weighted-average shares outstanding of approximately 86.5 million, including the shares repurchased as part of the ASR agreement; and
  • The company expects 2024 net interest expense to be approximately $75.0 million (excluding the write-off of deferred financing costs associated with the debt refinancing transaction). It also expects capital expenditures to increase roughly 20 percent (previously 25 percent), driven by additional clubs in the company’s corporate-owned portfolio and depreciation and amortization to increase approximately 10 percent (previously 11 percent to 12 percent).

Image courtesy Planet Fitness